US tax deal lifts global stocks
LONDON: Global equities advanced on Tuesday after a compromise deal to extend expiring U.S. tax cuts, though the euro zone's debt crisis and speculation over a possible interest rate rise in China kept them in check. The euro rose on optimism that Irish lawmakers will pass its toughest ever budget later in the day. The single currency remained vulnerable, however, with European policymakers dithering over how to tackle the region's debt problem.
Copper prices gained, supported by Chinese buying and a firmer euro, while uncertainties over monetary policy in Chinathe world's second largest oil consumer-weighed on crude prices.
U.S. President Barack Obama unveiled a deal late on Monday to renew tax cuts not just for the middle class but for also wealthier Americans, as Republicans wanted.
The announcement was welcomed by the markets, with U.S. stock index futures trading 0.2 to 0.3 percent higher and global stocks measured by MSCI All-Country World Index adding 0.3 percent. "The market is benefiting from the compromise in the U.S. on the extension of the Bush tax cuts and to a lesser extent from the probable voting (through) of the Irish (budget)," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
Europe's FTSEurofirst 300 (.FTEU3) index put on 0.2 percent and shares in euro zone peripheral economies also rose, while borrowing costs in those countries held steady.
The Irish benchmark (.ISEQ) gained 1 percent, as Prime Minister Brian Cowen is expected to get his fiscal plan through parliament and avert the risk of a snap election. Last month, the country accepted an 85 billion euro international bailout package.
The euro was up 0.4 percent at $1.3356.
"The euro is gaining support on optimism that the Irish budget will be passed but I expect any rallies to be fleeting. Structural weaknesses in the euro zone remain in place," said Lee Hardman, currency analyst at BTM-UFJ.
The single currency region's policymakers have yet to show the financial markets that they can decisively resolve its debt problem. German Chancellor Angela Merkel, speaking in Berlin, rebuffed calls for a bigger financial safety net or joint euro bonds. -Ap